South32 to increase equity in Arizona Mining to 19.9%
South32 has signed an agreement to increase its stake in Arizona Mining to up to 19.9% through the acquisition of an additional 15 million shares.
In May, South32 acquired 45 million common shares, equivalent to around 15% of Arizona Mining under a private placement and investor rights agreement.
According to the company, a third-party financial institution is expected to purchase shares in the market over the next 12 months.
South32 CEO Graham Kerr said: "Our continued support of Arizona Mining is aligned with our strategy to invest in high-quality mining projects where we can add value.
"This incremental investment increases our interest in the highly prospective Hermosa project and demonstrates our commitment to work with Arizona Mining to unlock its full potential."
Located in Arizona, the Hermosa project comprises the Taylor zinc-lead-silver sulfide deposit and the Central silver-manganese-zinc manto oxide deposit.
Based on results of the preliminary economic assessment in April, the Taylor deposit has measured mineral resource of 8.6Mt, grading 4.2% zinc, 4% lead and 1.6 opt silver, in addition to an indicated mineral resource of 63.8Mt, grading 4.5% zinc, 4.4% lead and 1.9 opt silver.
With a net present value (NPV) of $1.26bn and internal rate of return (IRR) of 42%, the 10,000tpd project has inferred mineral resources of 38.6Mt, grading 4.4% zinc, 4.2% lead and 3.1 opt silver.
First production from the project is scheduled in 2020.
Image: South32 CEO Graham Kerr. Photo: © South32.